What is Information and Knowledge Management and why do organisations need it?

Changes in economy and society mean people can make a lot of money selling, manipulating, repackaging and interpreting information e.g. newspapers, books, stock exchange, online databases.

Peculiarities of Information as a Commodity Price of information sources are not linked to them value of information contained in them Much information obsolesces Rate of obsolescence varies from subject to subject A piece of obsolescent information can cost more than a piece of new information The cost to an organisation of bad information Information is never consumed You copy it over for your own purpose Information is circulated Possession of information can increase power Value of a piece of information hardly ever depends on whether you have the original Information is often produced as a by-product of other processes Individual bits of information may be of no value, but with other bits together they can be invaluable. No agreed measure of a unit of information. Cost of Information Acquisition An insurance policy, investment, acquired to help make future decisions. Price of acquisition is difficult to attribute Long term benefits may be ignored Time saved Mistakes avoided Increased knowledge Better decisions taken Cost and Speed of Delivery Free information is often denigrated its value isnt always reflective of how cheap it was Speed of delivery important knowing this weeks winning lottery numbers more valuable than last.

Information The benefit of information is not quantifiable it is usually intangible However, if the use of information leads to higher profits or reduction of other costs, and the cost to acquire that information is less than the benefit, than its worthwhile. Benefit Costs = Value of info Information only has significance when the content reaches someone and has an effect on them. Data + Context = Information red light + traffic lights = STOP! Information must have meaning. Information has meaning to recipient because of the context in which the data is received. We are constantly bombarded with Information we are selective as to what we take on board. Vast number of information sources writing, broadcasting, film, computers, telephone etc. Knowledge Understanding gained through experience or study (Awad and Ghaziri) Difference between IM and KM Information Management focuses on the management of documents and artefacts Knowledge Management focuses on the management of know-how and expertise We are living in a knowledge society Information and knowledge are key assets for an organisation The context of information is crucial to its value The conversion processes from information to knowledge is a human process.

Data, information and Knowledge Data (Awad & Ghazhiri) Unorganised and unprocessed facts A set of discrete facts A prerequisite to information Does not offer judgement or a basis for action Information (Awad & Ghazhiri) Derives from the word Inform to give shape to An aggregation of data that makes decision making easier Facts and figures based on reformatted or processed data Focus of information is qualitative Information as Data endowed with relevance and purpose (Drucker 1980) Knowledge (Awad & Ghazhiri) Resides in peoples minds therefore harder to capture Human understanding acquired through study and human experience

Jashapara

Truth Wisdom Knowledge Information Data

Tacit and Explicit Knowledge Knowledge exists on a continuum between tacit (know how) and explicit (know what) (Polanyi 1958) We know more than we can tell how can we convert tacit knowledge into explicit? (Nonaka 1994)

Concepts in Information Theory Entropy random disorder in the universe noise higher entropy leads to less information Uncertainty information is that which reduces uncertainty But overload can lead to increased confusion Three Schools Learning School (top) information is seen as something that develops knowledge Expressions School (bottom) information is seen as something created by knowledge Uncertainty School (middle) Realms of entropy Two conceptions of Information Epistemic Information human centred considered in the context of human knowledge and understanding. Systemic Information systems engineers view considered in the context of a particular means of physical representation. Epistemic Information characteristics Uncertainty Information often reduces uncertainty about events in the real world Ambiguity Information requires interpretation within a context to identify a precise meaning

Tom Stonier: Knowledge is organised information in peoples heads. Allows for informed action.

Information and Knowledge: creation, codification and capture Information Management The utilisation of codified knowledge to produce formal representations of information entities, which allow the automation of transaction processing, decision making and information retrieval (Cronin and Davenport 1991) The process of managing the information needs, processes and resources of an organisation. IT as a solution The collection, storage, manipulation and retrieval of information are much easier due to improved hardware and software. But expensive IT is not a solution IT often leads to information overload

Three Levels of IM (Middleton 2002) Technical/Operation organisation of records, indexing, preparations of abstracts etc. Analytical studies of information needs and uses; production of inventories of information resources. Strategic Administration of information sources; development of culture based on effective recording and transmission of information; development of an IM strategy and information policies

Organisational decision making Intelligent organisations Make rational, sensible decisions based on clear evidence and experts hunches Focus on the role of IM in aiding the decision making process. Information Resources Management Putting a monetary value on information Views information as: Being of fundamental value, like money, capital goods, labour and raw materials With measurable characteristics such as methods of collection and a life cycle pattern Something that can be capitalised and which can be controlled using cost accounting techniques An input that can be transferred into useful outputs that are beneficial to achieving organisation goals and objectives.

Knowledge Management Cycle (simplified) Less straight forward than IM dealing with intangible commodity

Sharing

Creation

Codification

Capture

Knowledge Creation Knowledge resides in the individual and not in a collection of information SECI model of knowledge creation (Nonaka and Takeuchi 1995) Japanese concept of ba a place or a platform. Knowledge is created when information is put into context e.g. when people gather in a meeting room and share their knowledge to solve a problem, they are providing a shared Tacit to tacit Tacit to explicit context to create new (Socialisation) (Externalisation) knowledge. Team meetings and Dialogue within team discussions Informal communication Answer questions Brainstorming

Explicit to tacit (Internalisation) Learn from a report

Explicit to explicit (Combination) Email a report

Knowledge Capture The transfer of problem solving expertise from some knowledge source to a repository or program (Awad and Ghaziri)

Capturing Tacit Knowledge A process by which the experts thoughts and experiences are captured (Awad and Ghaziri) Involves interpretation of information and understanding of experts underlying knowledge and reasoning process. Interpretation is used to build rules that represent the experts thought processes or solutions.

Methods for capturing tacit knowledge Expert interviews, observation, brainstorming, protocol analysis (thinking aloud), mentoring and apprenticeship, storytelling.

Knowledge Codification The organisation and representation of knowledge for effective transfer and use to support decision making and the achievement of organisational objectives. Methods for Codification of Tacit Knowledge Usually more a question of pointing to a person with expertise - cannot be reproduced in document or database, so; Knowledge sharing events Knowledge mapping visual representation that points to people, documents and repositories. Direct people where to go to access expertise. For tacit knowledge, limited to making the link between the seeker and source of expertise. Decision trees a hierarchically arranged semantic network composed of nodes with goals and links that represent decisions or outcomes Knowledge modelling process that tries to mirror human expert thinking Case-based reasoning reasoning derived from relevant past cases to arrive at conclusions. Its a technique that records and documents cases then searches appropriate cases to determine their usefulness in solving new cases e.g. medical diagnosis, car repair etc. Explicit Knowledge Should be organised, categorised, indexed and accessed via the companys intranet or some other means to make it visible, accessible and useable. Intranet/Enterprise Portal fulfils knowledge functions Gateway to databases, discussion forum, e-document repository, FAQs etc. Document Management systems accessible by everyone

Intellectual Capital The value, or potential value, of an organisations intellectual assets (or knowledge assets). An attempt by organisations to place a financial value on their knowledge. Intellectual capital is often defined as the combination of three sub-categories: human capital, structural capital and customer capital. (Sveiby, 1997) The difference between the market value of a publicly held company and its official net book value is the value of its intangible assets.

The Formation of Intellectual Capital Newell et al. 2002

Market Value Financial Capital Customer Capital Intellectual Capital Human Capital Social Capital

Structural Capital

Financial Capital The financial assets of the organisation Measured with accountancy metrics Assets/liabilities in the balance sheets, P+L in P+L account But limitations with respect to knowledge-based businesses.

Customer Capital Relationships developed with key customers Intangible but represent value: Brand names, loyalty and repeat business, established distribution channels, goodwill and reputation Can be quite volatile e.g. facebook?

Structural Capital Hardware, software, databases, information, organisational structure, patents, trademarks that support employee productivity. Work environment, access to the internet, information systems, workgroup tools for collaboration Everything left at the office when employees go home

Human Capital Combined skill, knowledge, innovativeness, experience and ability of employees Also includes organisations values, culture, philosophy Sustained by motivation and reward, including pleasant working environment, good support, interesting jobs, salary, perks Human Assets are not physically owned by the company Employees can fall ill, take holidays, be unreliable, and can hand in their notice.

Human Capital Equation HC = (Ability + Behaviour) x Effort x Time spent If effort or time spent = 0 then HC is also zero Protecting Human Capital Identify staff that have HC that the organisation values highly. Which of them have characteristics that make it likely that they might depart? Decision time is often linked to bonuses or pay rises; promotion or non-promotion; end of a major project; changes in personal circumstances.

Social Capital Networks of relationships that exist in the organisation The way people identify with, or use, those networks Linked to exchange of tacit knowledge Trust o Goodwill trust (trust that the other person will not act against your interests) o Competence trust (trust that the other person has relevant skills and expertise)

Trust Trust and mutual respect cannot be enforced they must be earned Best to start mutual co-operation in an area that is not crucial, and then gradually build up the trust. As organisations become flatter and ICT becomes pervasive, need for trust increases. Trust is a belief of likely outcomes based on past experiences.

IM & KM are component parts of the broader concept of IC. In 1998, 82.3% of 1300 firms named IC as the critical factor for future business success (Bertels and Savage 1998) Measuring Intellectual Capital Difference between market capitalisation (value) and book value Total value of companys shares at the moment i.e. No. of shares x price per share. Book value is value of fixed assets on companys balance sheets e.g. land, buildings, plant, equipment, cash those things with a lifetime of more than one year.

Calculation subject to variable factors: Gossip, hopes of new products, gut feelings about a companys prosperity. Gap between market value and book value grown too large need another way to measure intrinsic value of a company. Hi-tech companies have large gap i.e. high IC values Traditional companies have relatively low IC values.

Tobins q Market value/book value If q > 1 then company has intangible assets, the greater the value of q the more important are the tangible assets. Measure of amount/intensity of IC assets in relation to book value, rather than IC calculation Significance of the values Impossible to measure IC and q for companies not quoted on the stock exchange o Market values can be unpredictable o Effect of changing interest rates, market sentiment and money supply for example. Having a high q is arguably a good thing IC is trying to encapsulate non-financial measures o More to do with human resource performance than financial measures.

Balanced scorecard (Kaplan and Norton 1992) Intended to provide balanced information about corporate performance to management. Theoretical basis is that financial data alone is insufficient for effective decision making. BS includes measures for; o financial performance revenue growth, cost management o customer base market share, customer retention/acquisition/satisfaction o internal businesses processes quality measures e.g. % of deliveries on time o learning and growth Employee capabilities, IT, motivation, empowerment

Measuring Intellectual Capital Some issues Lack of clear, agreed methods of calculation benchmarking? How do you interpret the figures? Does it provide evidence of competitive advantage? Is the measure sustainable? Is the measure anchored in the organisational culture? Does it encourage proactive changes? Many different models of IC all similar, no right or wrong one. Intellectual Property Intellectual assets for which protection has been sought o Ideas inventions, words, music, theatre, art Protection such as Patent Acts, Trade Mark Acts, Copyright Acts, Registered Design Acts. Rights can be sold (assigned), rented (licensed), passed on Rights to prevent others making use of your property without permission Strategic management of IPR can lead to competitive advantage.

Justification for Intellectual Property Rights Balance between rights of owners and rights of users Is it right that the creator should be able to stop copying?

Valuing Information Value is subjective value to whom? Value depends on willingness to share, and on use made of the information and knowledge Can use information for leverage, as power and influence. Facebook recently been valued at $50 billion dollars. Granted, theyve had vast donations, but much of their value lies in their customer/structural capital, their database of the world.

In what ways is information similar to other resources? Information is acquired at a definite measurable cost Information possesses a value which can be quantified Information consumption can be quantified Cost accounting techniques can be applied to control the cost of information Information has a life cycle Information can be processed and refined Substitutes for information are available and can be quantified as more or less expensive

Information, unlike many other resources Can be expanded or compressed Can move extremely fast across great distances Can leak outside the organisation Is slippery, intangible and elusive (Taylor and Farrell) Can be shared without loss

Benefits of Information Gives organisations competitive advantage Reduces risk, reduces costs, adds value and helps innovation However, it is difficult to value because of the subjective nature of its value Nevertheless organisations want to know what the value of their information is.

Why Value Information? If one cannot value information assets, once cannot manage them Rare to see information assets on a balance sheet Cost can be assessed objectively, value is subjective.

Need to calculate value due to mergers, takeovers, obtaining finance, restructuring We are a knowledge-driven economy; many quoted companies have very high levels of IC.

Research claims that current accounting methods prevent the financial reporting of about 2/3rds of the value of organisations. Valuing to justify a particular initiative or expenditure. Ways of valuing information Asset-based e.g. cost to replicate information? Cost-savings based e.g. cost versus obtaining the information via other means? Risk-based costs to business if information were not available? Profit-based potential income from selling information Value could be based on: Quality Utility Impact on productivity/effectiveness/finances The value of information in organisation is only how well it is utilised and thus is reflected in the profits? Two major measurement approaches Financial Measures Performance Measures These two approaches are increasingly used together.

Why not Financial Measures alone? They are backward looking They do not indicate future performance They do not help to manage or measure performance Even audited accounts can be unreliable indicator of value e.g. Enron

Examples of Measurement Models Information audit Information Resource Mapping Information Resource Management Balanced Scorecard Strategic Information Alignment Framework

Information audit An information audit is a systematic process through which an organisation can understand its knowledge and information needs, know what is knows, the information flow and gaps . Resulting from an information audit is an information map, which can be used as the basis for designing the content of intranets, as well as the foundation of a corporate information strategy or a knowledge management strategy. (TFPL) Information Resource Mapping Used for modelling information resources within an organisation Can focus on content, flows, or both Allows us to distinguish between critical information resources and those of marginal value

Information Resource Management The planning, budgeting, organising, directing, training and control of informationwhere information itself is a resource. (Taylor and Farrell) Hortons Criteria for Calculating Value

Effectiveness in supporting activities it is meant to support Strategic importance to Activities it is meant to support Strategic importance to activities it is meant to support to organisation as a whole.
Value = E x A x S - If any of the criteria = 0, it is of no value. Information Resource Management Processes Identifying and Acquiring internal information sources (information audit or information mapping). Structuring internal information Sourcing, acquiring and evaluating external information Integrating internal and external information. Delivering information (Abell and Oxbrow 2001)

IRM Purposes Develop corporate information policy or strategy Establish central information service Uncover hidden assets If there isnt high value placed on info, there wont be high value on keeping it safe and secure. Identify waste and duplication

Uncover poor practices Guide to future investment Identify risks and dependencies

IRM views information as: Something of fundamental value, like money, labour, raw materials, fixed assets etc. Something with measurable characteristics e.g. methods of collection, uses, life cycle etc. Something to be capitalised or expended, i.e. accounting techniques can be used to control it. Inputs that can be converted to useful outputs that are beneficial to achieving organisational goals. Problems IRM can solve Failure to integrate computerised and paper based systems Lack of standards and procedures for handling information High costs of storing and distributing information Loss of original records Staff having too much or too little information to do their jobs properly o Information hoarding o Difficulties in finding required information information relevance filter failure? o Too many personal collections o Retaining information just in case its needed Problems linking information from different sources Over reliance on IT as a panacea. Potential Benefits of Effective IRM Reduced operating costs (especially in storing and recording information; avoiding potential legal costs if documents are lost) Improved performance (reduction in time wasted and in duplication) Money earning potential (non-confidential information with commercial value)

Strategic Information Alignment Framework Information has value in enabling competitive advantage in four important ways 1. Adding value 2. Minimising risks 3. Reducing costs 4. Creating new reality i.e. could transform what the business does. (Marchand)

Problems With Current Methods No agreed single method Methods tend to be focussed on cost-benefit rather than overall performance Methods for valuing patents and goodwill are not necessarily appropriate for information Much information has a cost, but no value

Is Value Important When Designing KM Solutions What are the goals of the KM system? o Could be to improve collaboration o Could be to organise documents and improve reuse of information o But organisations will expect value from expenditure on any system o Must realise long term gain of information

Value and KM solutions Important to identify costs and risks Easy to measure how many documents are in a repository but much harder to value a specific document. Information is just one factor in many elements that impact on business performance.

Culture and KM systems Culture has an impact on value from KM: o How will KM fit into the company culture o Different types of culture exist in different types of organisations

Some questions Does the org reward teams or individuals? Incentive to share, but only within the team How do you promote knowledge sharing? Culture, rewards Is the information valuable if it is held only by the individual employee? No Does the value increase if the information is formalised and structured in a KM system? Yes

Information as a Resource The cost of acquiring and maintaining information resources must be justifiable. So costs should be quantified, justified and subject to normal planning and budgetary controls, and owners of information resources should provide for their maintenance.

Information Overload and Information Politics

Information Overload One of the major problems for individuals working in an organisation. Information Science had tended to focus on methods of retrieval, but not on tackling overproduction of information. Clay Shirky info overload has been a problem since the invention of the Guthenbergs printing press. Hutchisson, How can mankind cope with this vast store of knowledge that has been built up and which daily becomes more unwieldy? This, to my mind, is a major intellectual problem facing society today. In most fields of knowledge too much has been written for any one individual to follow. Causes of Information Overload Much information is useless o Unreliable, repetition, poorly written, off-topic Obligation to read it all o Risk of missing the golden nugget Methods of communication are expanding, and with it does information and difficulties managing it Information is available more cheaply Malone, Have moved from information desert to information jungle

A feature of the E-Economy Placing an order online triggers a vast number of transactions in various systems at various companies. Many data records, large paper trail. An Information Glut? More information produced in the last 30 years than in the previous 5000. Weekday edition of NYT contains more info than an average person in the 17th century would have come across in a lifetime. Amount of electronic information doubles every 1-2 years (Lewis) BUT more is not the same as better.

Why does information Overload Matter? The urgent drives out the important Dangers of missing vital information It can stifle organisation communication Abundance of competing information could result in decisions not being taken Financial and intellectual implications for an organisation Employee stress Costs to the organisation and to the individual Inability to find relevant information Information overload results in up to 30 million working days lost per year in UK

The Information Paradox Individuals thrive on, and yearn for, information Drowning in an ocean of data, but dying of thirst for information Too much information can impede work performance and cause psychological and physiological harm.

Technology and Information Overload Internet can generate much irrelevant information 24/7 and instant response culture The cost of email interruption (takes over 1 min on average for employee to return to same work rate as before attending to the email) Can enable faster access to information

Solutions Technology based solutions: Corporate portals Personalisation e.g. RSS. User-based solutions: Information / communication strategies Email training Better filters (Shirky)

Information Politics Knowledge is power Francis Bacon 1597 Davenports 5 models of Information Politics 1. Technocratic Utopianism tech will solve all information problems, just a matter of getting right bit of kit. IT is neutral, information will be shared. 2. Anarchy Information resides in local PCs, its sharing and use is haphazard no common view on what to do with it 3. Feudalism Information is controlled jealously by those who have it. 4. Monarchy top level diktats mandating how info is to be managed 5. Federalism negotiation between information holders and users. Issue is how to work out collective agreements to meet diverse interests. Monarchy and Federalism most effective in developing enterprise-wide quality of information management. Requires good leadership and culture that encourages co-operation and sharing.

Knowledge Transfer and Sharing A Social Process

Knowledge is; More than information A social construct A key organisational asset Dependent on individuals A spur to action or decisions People are our most valuable asset their knowledge is the most valuable asset

Explicit Knowledge Knowing that Objective and formal Tangible, even in verbal form Capable of being encoded Capable of being recorded in a systematic way Accessible and can be communicated to others.

Tacit Knowledge Knowing how Know-how, intuition, experience Inside peoples heads Affected by value judgments, prejudices, feelings Often chaotic, difficult to codify or to store Often difficult to communicate and share Valuable rich source of learning Not easily expressed, but made available through actions, analogies, metaphors.

Tacit vs. Explicit Nonaka and Takeuchi argue that the Japanese value tacit knowledge whilst the USA values explicit knowledge. You can classify knowledge in other ways e.g. Meadows rational vs. emotional

Awareness of Tacit Knowledge If you watch an expert at his/her craft, you might understand every stage of what (s)he is doing, but still be incapable of doing it yourself. Management of Tacit Knowledge Needs understanding of HRM and psychological issues Tacit knowledge is views as a major personal asset that gives status and leverage An assurance against being made redundant So, it requires good people management and trust.

Communication of Tacit Knowledge Database of expertise is a simple starting point Storytelling e.g. gossip, chats in corridors Can also be done through phone and email, but less commonly done through formal documents Can be accurate and perceptive, but can also be inaccurate, malicious or out of date Often taken as accurate even if it conflicts with official information

Size of Organisation and Tacit Knowledge Small orgs problems with exchange of tacit knowledge are rare Medium orgs can be problematic, too large for informal exchange, too small to invest in IT. Large ors invest in IT but they can be slow moving and bureaucratic, so depends on culture Knowledge Management is; Not a set of technical processes, but a human and social process, which is likely to be assisted by technologies.

KM Involves People, Technology and Processes (Awad and Ghaziri)

People / Culture

Technology

Organizational Processes / Structures

Corporate Culture trust, barriers to sharing, transparency, motivation Structures to encourage knowledge sharing Technology hardware, software and telecoms infrastructure KM is Primarily about People Invest 80% on people and 20% on technology Knowledge is complex, so KM is a multilayered concept that will vary greatly form one organisation to another Associated with flatter structures, reduction of bureaucracy, decentralisation, and use of IT. There is an over-reliance on IT assumes most knowledge is explicit and therefore can be conveniently captured and codified.

KM Involves Using accessible knowledge from external sources Embedding and storing knowledge in business processes, products and services. Representing knowledge in databases and documents Promoting knowledge growth through organisations culture and incentives Transferring and sharing knowledge throughout the organisation Assessing the value of knowledge assets and impact on a regular basis (Awad and Ghaziri)

Why Share Knowledge? Retirement, redundancy, resignation, promotion etc. Specialisation Avoid reinventing the wheel, reduce, duplication, and avoid same errors Large, distributed enterprises with virtual (global) teams.

Storytelling Helps corporate learning Ensures organisational memories grows Builds teams and Communities of Practice Overcomes fear of change Helps employees reflect on experiences Promotes sharing of ideas

Communities of Practice Groups of people who share a concern, a set of problems, or passion about a topic, and who deepen their knowledge and expertise in this area by interacting on an ongoing basis. (Wenger 2002) Communities of Practice Characteristics Self-organised and informal Everyone can learn regarding a common goal Common important business-related purpose Short or long-lived Cut across functions, divisions, seniority Support by senior management Repositories of tacit knowledge Keep organisation ahead in knowledge creation and exploitation

Other KM Techniques for Knowledge Sharing Knowledge Fairs and Open Forums Cross-functional Teams Job rotation and mentoring Web 2.0

The Importance of Culture

KM involves; Encouraging key individuals to stay therefore it is more about people management than IT A total commitment by the organisation to sharing knowledge therefore the reward system must reflect this commitment Career development, appraisal and training that is geared to KM strategy Culture of trust and leadership by example. Personal Motivational Factors and Knowledge Sharing Intrinsic versus extrinsic motivation Challenges faced Skills and knowledge

Organisational Structure and Knowledge Sharing Freedom from rules Participative and informal Many views aired and considered F2f communication; little red tape Interdisciplinary/interdepartmental teams Emphasis on creative interaction Outward looking willingness to take on external ideas Flexible and non-hierarchical Information flows downwards and upwards.

5 Factors Impacting on Willingness to Share Core cultural values Recruitment of suitable personnel Role of human networks Rewards as motivational tool Role of a champion. Sharing Knowledge is Power. Open communication Hire people who are good at learning & teaching. Creating CoPs bring people together. E.g. office layout, secondment, job rotation etc.

Barriers to Knowledge Sharing Lack of trust Knowledge is power Knowledge sharing is not my job Virtual offices and teams Lack of time and meeting places Narrow idea of productive work Not-invented-here syndrome Intolerance for mistakes or need for help Inherent difficult of unlearning Status of the knower IPR.